Beatles deal highlights videogames' role in music industry

by Eric Benderoff

The Beatles have found a digital format they like for licensing songs: a videogame.

The legendary band that had rebuffed the modern era by not allowing its music to be sold as digital downloads at iTunes and other online music stores will feature its songs on a new game from the makers of “Rock Band,” companies involved in the deal announced Thursday.

The Beatles join a host of other well-known names, including Aerosmith, Boston, David Bowie, the Grateful Dead and Kiss, that license songs to a booming category of videogames that allow players to mimic rock stars.

The deal comes at a time when recorded music sales continue to plummet - down 16 percent so far this year, according to the NPD Group.

“Given the current music environment, with CDs under a lot of pressure and retail space for music sales shrinking, a lot of bands and labels are asking how they re-monetize their catalog,” said Russ Crupnick, an NPD Group analyst who tracks music sales. “You look around and see that videogames are a good way to keep the brand alive.”

Not long ago, the idea of musicians licensing songs for use in a videogame might have sounded crass, and generated cries of “sellout.” Now, artists and record labels are seeking new ways to replace the revenue lost from declining CD sales, which is changing the music industry as they turn to ring tones, digital downloads, social networking sites and videogames.

For example, Chicago’s Smashing Pumpkins released a single, titled “G.L.O.W.,” on the new game “Guitar Hero: World Tour,” the latest incarnation in that popular series. And Oasis this month debuted its new album, “Dig Out Your Soul,” on MySpace.com.

“We are looking at an industry that used to rely on one format to sell music, now it relies on dozens,” Crupnick said. “There will continue to be a huge fragmentation on how people consume music. But from a consumer standpoint, that can be good - I can get the songs I want on the devices I want at prices I can afford.”

The move by the Beatles could signal a broader shift in strategy by Apple Corps, which was founded in 1968 to manage the band’s catalog. Apple has declined to make the band’s music available through legal Internet downloads.

The untitled game, which will be available for the 2009 holiday shopping season, will feature an unknown number of Beatles songs and will be based on the Rock Band series published by MTV Games and created by Harmonix Music Systems. The surviving members of the Beatles, Paul McCartney and Ringo Starr, are helping to develop the game.

“The project is a fun idea which broadens the appeal of the Beatles and their music,” McCartney said in a statement. “I like people having the opportunity to get to know the music from the inside out.”

Few details were released about the game, including terms of the deal.

Although it’s unclear how much the Beatles will earn, the deal will help the Rock Band franchise compete against the older “Guitar Hero” games. Through September in the U.S., all version of Guitar Hero have sold 19.2 million copies, while Rock Band titles have totaled 4 million total sales, according to NPD.

The timing of the announcement has been questioned, since a version of “Guitar Hero,” featuring 86 songs from such artists as The Eagles, Michael Jackson, The doors and Van Halen, went on sale last week.

A spokeswoman for MTV said the Beatles deal was announced Thursday simply because “the deal got signed,” and did not elaborate on when it was signed.

The Beatles isn’t the only group to get a Rock Band deal. Next week, Wal-Mart will be the exclusive retailer for a “track pack” of live songs for the Rock Band game from AC/DC. The 18 live songs, which include the hits “Back in Black” and “Dirty Deeds Done Dirt Cheap,” were remastered for the game.

AC/DC already has a successful agreement with Wal-Mart. The band’s new album, “Black Ice,” was released exclusively at Wal-Mart on Oct. 20. “They sold 800,000 copies of the CD in the first week,” Crupnick said, calling it a very healthy figure for the band.

But not every band has such marketing power.

“It’s getting to be more challenging for second tier and new artists to break through,” Crupnick noted. “You can’t match the exposure you once had with radio and large music retailers.”